MaC Venture Capital was started in 2019 as the merger between two venture firms. In six years, the company has amassed around $600 million in assets under management. MaC raised its third fund in October to the tune of $150 million, allowing it to continue funding companies at their earliest stages. Michael Palank, who joined the Hollywood-based firm during its inception, came from a career working at venture-backed companies in the media and tech sectors.
Why have you chosen to set your sights on seed-stage and early-stage companies?
As a firm, we chose seed-stage investing because we thrive on helping people in their early journeys – a passion shared across our team before entering venture capital. For example, Adrian (Fenty, founding managing partner at MaC), as the mayor of Washington, D.C., supported his constituents; Marlon (Nichols, another founding managing partner at MaC), worked as a consultant with clients across various industries; and Charles (D. King, general partner at MaC) and I, through the William Morris Agency, helped early-stage artists build their careers. The seed stage allows us to make the most significant impact by guiding founders early on when they need it most. If we get it right, the results can be transformative for both the companies and the broader ecosystem.
Can you explain how factors like location, risk appetite and sector preference played into your decision?
Our risk appetite aligns well with seed-stage investing. Startups have the highest amount of risk associated with them at the early stage. At MaC, we’re comfortable taking that risk because we see the potential upside and impact that these founders, their products and their companies can have on the world. Geographically, while many of our investments are in California and Africa, we look for companies that can have a sustained competitive advantage given a specific geography, and thus we remain geographically agnostic. We believe opportunities for venture-scale outcomes exist across various industries and locations.
How do you define pre-seed, seed and early stage? What benchmarks do startups need to meet in order to be classified as each?
There’s no absolute rule of thumb, but generally: pre-seed includes pre-product, pre-launch and pre-revenue, often just an idea with a strong team seeking initial funding to validate it. With seed, there’s usually something beyond the idea stage, such as proof of concept or validation through letters of intent or MOUs (memoranda of understanding); this varies by industry (e.g., space vs. SaaS). In early-stage (can be seed or series A/B), the product is in the market, there’s emerging product-market fit, a growing team, revenue and signs of scalability, and the goal is to use funding to accelerate growth.
Do you feel like the standard for what is classified as “seed” or “early-stage” has changed over the years in the venture community?
Yes, especially with the advent of and recent advancements in AI. We’re seeing pre-seed and seed rounds at billion-dollar valuations, with some of these investment amounts seemingly thrown out solely based on the founder or the potential of the AI sector. While some of these will succeed, others will look unreasonable in hindsight compared to traditional software seed rounds.
Investing in nascent companies that don’t have the reputation or revenue of developed startups is rather risky. How do you go about determining what investments are the right ones?
We rely on a prepared mind, shaped by extensive research and a strong thesis in sectors we’re bullish on, such as energy, hardtech, fintech and aerospace and defense. For example, we’re particularly optimistic about energy, especially given the well-documented strain on global energy supplies and the immense infrastructure demands of AI data centers. The massive tailwinds in this industry suggest significant potential for multi-billion-dollar outcomes.
Before making an investment, we dive deep into the sector, developing a clear opinion of its opportunities and challenges. We assess whether a prospective portfolio company can truly solve a pressing problem within this context and sector. Beyond the sector’s potential, we rigorously evaluate whether the team can execute on its vision. Do they have a realistic plan? Can they achieve their goals within the proposed timeline? With the amount of funding they’ve raised to date? If the answers align, we’re prepared to invest even in the early stages, confident in the potential for transformative outcomes.
What is the riskiest investment you’ve ever made? How did it play out?
Volta Space, a company working on lunar power solutions, was our riskiest investment due to the emerging lunar economy and the challenges of space exploration. Space technology is hard, but the moon is even harder; despite the risks, if they succeed, the potential impact and ROI (return on investment) are enormous.
What late-stage or exited company are you proud to say you’ve invested in early? What about that company made it worth the investment?
Wonder Dynamics was acquired by Autodesk, validating our early belief in the company and the founders. Being part of that journey and seeing another major company recognize the value of the founders, their idea and their company was incredibly rewarding.
Additionally, Stoke Space is a company we’re proud to support, as it reflects the type of transformative brand MaC Venture Capital aims to build.
What role do seed-stage and early-stage firms play in the larger startup community?
Seed and early-stage firms are the foundation of the startup ecosystem. Iconic companies like Google and Apple once began as seed-stage ventures. Seed investors take risks on visionary founders, creating the conditions for innovation to thrive. Without early-stage funding, the startup community would lack the lifeblood needed to grow and evolve.
What role do you see later-stage venture firms playing in bolstering the innovation ecosystem?
Later-stage firms are essential for sustaining innovation, especially in capital-intensive sectors like hardware, space, and defense. While L.A. previously lacked later-stage firms, in recent years the ecosystem has grown significantly, enabling startups to scale without looking to Silicon Valley. My vision for MaC is to lead or participate meaningfully in a series A or a capital-intensive round of a promising company – either one we initially backed at the seed stage or one we missed but now recognize as having significant potential. More later-stage firms focusing on hard tech are still needed though.
Have you ever made an investment you regretted? Can you explain what happened?
I can’t say I regret any investments, but I’ve definitely learned from them. There have been times when I focused too much on the technology and didn’t fully evaluate the team’s ability to execute. Those experiences taught me the importance of not just betting on a visionary founder but ensuring they have the skills – or the right team in place – to bring their vision to life.
As the startup community in Los Angeles has gotten more developed, and as startups globally blurred geographic lines since the pandemic, how has your brand as a Los Angeles venture firm evolved?
While most of our team is based in L.A. and Silicon Valley, we aim to be known as a firm that invests in promising founders anywhere. L.A.’s vibrant tech ecosystem offers immense opportunities with its strong university system, diverse sectors, and robust VC presence at all stages. However, we also invest outside the region and want MaC Venture Capital to be recognized as a great firm, not just a great L.A. firm. MaC is one of the most active VC firms investing in Africa, a region that we see as the next major frontier for innovation and business growth. The firm has invested over $20 million in African startups, making MaC one of the largest and most active seed-stage investment firms on the continent.
